U.K. Unemployment Unexpectedly Falls for First Time Since February 2008

Overview
Jobless claims in the United Kingdom unexpectedly tumbled 6,300 in November after increasing a revised 5,900 the month prior to mark the first decline since February 2008, with expectations for a 12,500 rise, the office for National Statistics said in London today. At the same time, average earning including and excluding bonuses added 1.5% and 1.7% respectively, and the data plants an improved outlook for the region as policy makers see the economy emerging from the worst recession since the post-war period.

The Breakdown
The breakdown of the report showed the number of people in work rose by 53,000 to 28.9 million in the three-months through October, posting the largest increase for 17 months, while the number of  unemployment claims advanced by 5,900 instead of the 12,900 originally reported.  For the percentage change in the quarter, government supported trainees leapt 3.5% and was followed by 0.6% rise in self-employment, while employee jobs pushed 0.6% lower to taper the advance.



Although unemployment has risen by less than what officials initially predicted amid companies cutting employee working hours and freezing pay in order to retain skilled labor, unemployment is still expected to peak just below 10%, which is likely to weigh on the wider economy, and the Bank of England is widely anticipated to maintain its benchmark rate steady at 0.50% in order to encourage a sustainable recovery. At the same time, the central bank announced it will take an additional two-months to complete is GBP 200B asset purchase program and pledged to keep the emergency program under review as the outlook for growth and inflation improves, and the BoE may hold a neutral policy stance throughout the first-half of the following year in an effort to balance the risks for the real economy. There was positive reaction to the data, with the GBP/USD soaring 50 pips following the first 10 minutes of the release, and later reaching an intraday high of 1.6372, while looking to test the 100-Day SMA at 1.6143 for short-term resistance.